At 76 years of age, Robert Eggert is the embodiment of power. He flies to meetings with Alan Greenspan, chairman of the Federal Reserve Board. He swaps fishing gear with Paul Volcker, former chairman of the Federal Reserve Board. He pals around with Milton Friedman, considered one of the greatest economists of the twentieth century.
Eggert rattles off the dynasty builders he's worked with like an East Valley Rotarian talking about insurance salespeople. He gossips about Lee Iacocca.
Eggert is mentioned weekly in the Wall Street Journal. The New York Times calls him the "best known tabulator of prevailing business sentiment" in the country.
An economist who produces a monthly report on the state of the nation's business, Eggert is the business world's answer to Jimmy the Greek. His newsletter the Blue Chip Consensus is sent to 1,489 subscribers heavily represented in the Fortune 500. For a $439 annual fee, subscribers are treated to prognostications on where the U.S. economy is going. The Blue Chip Consensus hands out tips on what type of investments to buy, and predicts which business sectors will be soaring or sinking.
Eggert does this all from Sedona, which, when you come to think about it, is a pretty good place for prognosticators.
Crystals and metaphysical bookstores have popped up like mushrooms in Sedona during the last ten years. The influx of soul-searchers reached its peak during 1987's "Harmonic Convergence," a rare planetary alignment that worshipers thought signaled a new age of peace and harmony.
"We had all types of people here," Eggert says with a laugh. "A handful even felt that Bell Rock was going to go up in the air and well, you know, kind of hover there. We tried to joke with them, but they were so serious."
Eggert shrugs off the New Agers with an it-takes-all-kinds attitude. After all, as the only credentialed seer in town, he thinks there's room for everybody, even a practitioner of the dismal science.
These days, it's called that with good reason. Eggert is predicting that the economy is sliding quickly into a recession, and Arizona will take its lumps with the rest of the nation. SEDONA IS NOT exactly Wall Street, but it's where Eggert wants to be, and where, thanks to technology, he can be. Telephones, computer modems and facsimile machines keep him in touch with financial centers thousands of miles away. Eggert, in fact, had one of the first fax machines in the country and, as he says, "The telephones work just as good here as they do in New York."
It's hard, actually, to imagine Eggert working on Wall Street. He reaches out to meet his guests with a massive, calloused hand, and leads the way to a small and Spartan office.
His life has run full circle from small-town farm boy in Lincolnshire, Illinois, to big-city businessman, back to the small town, where this time he leads the life of a gentleman rancher, raising quarter horses. Eggert's pointy boots, bola tie and Western shirt fit a lanky, six-foot-four-inch frame and an easygoing personality. He can talk as easily about agriculture and horses as he can about the recent vagaries of the Dow Jones, and it's not an act.
"The first horse I ever rode was a blind horse named Buck," Eggert recalls. "I rode him three and a half, maybe four miles to school every day. Damned if that horse didn't know the way better than I did."
He is extravagant in his praise of his newfound home, and has adopted a certain small-town chauvinism. "I like places like this. This is where I always wanted to live. And, there are restaurants here as good as any in New York."
THANKS TO HIS electronic ears, Eggert has a $700-a-month phone bill--the highest, AT&T says, in the whole town. It's the result of the method by which he compiles his newsletter, a method that is not very complicated at all. Every month, Eggert calls 76 other economists nationwide--he refers to them as "cooperators"--and asks them their views of business conditions. The responses are returned, compiled and released as a "consensus" prediction. His newsletter, in other words, heralded by the Wall Street Journal as one of the "most accurate" in the country, does nothing more complicated than add 76 numbers and divide by 76. For this Eggert earns a six-figure income.
"I noticed real early in my career that economists were all over the map," Eggert says. "The old story that if you lay economists end to end, they all point in different directions, it's literally true."
Eggert admits his economic forecasting method is not foolproof, but it is consistently close to the actual numbers.
"In any one year, there will always be a better economist than the consensus, but there is never anyone who can consistently beat it," Eggert instructs. "Accuracy is like a hand grenade. You don't have to be exact. As long as you're reasonably close, it's effective." Eggert has known about averaging for years, although it began to make him rich only thirteen years ago, when he began publishing his newsletter. His career began in the 1930s in the stockyards, where he projected beef sales for the American Meat Institute. "When I started averaging the figures out, it was uncanny. You come up with a great ability to zero in on the actual number. It's not perfect, but it works."
The fact that averaging worked could sometimes be unnerving. In the Fifties, Eggert was working for Ford, doing economic and market research. He'd frequently poll automotive suppliers and other industry experts to produce an average from the group. "It was embarrassing," Eggert says. "The average figure was often more accurate than my own. And here I was supposed to be the guy who knew."
This admission comes from an economist with his own remarkable record of economic prophesying. At Ford, Eggert helped develop and name the Mustang, the company's biggest success story, a car whose code name on Ford memos was the "Special Car."
Eggert's inspiration for the vehicle came when he looked for consumer trends. The one that caught his eye as the 1960s began was the youth movement. The 15-to-29 age group would expand by nearly 40 percent between 1960 and 1970, he discovered, while the 30-to-39 category would fall by almost 9 percent. The baby boomers were the buyers of the future.
"What I had was a bulge in the birthrate," Eggert says. "There was a tremendous number of young people that a small sports car would appeal to."
The Mustang was designed for them--the young, first-time car buyer who wanted an alternative to a used car. "The idea was, that if they bought a Ford as their first car, they would develop brand loyalty."
On the project, Eggert was teamed with another young Ford upstart--Lee Iacocca. "Lee obviously deserves credit of selling the Mustang to Mr. Ford," Eggert said. "But he sure couldn't pick a name."
According to Iacocca's autobiography, the car was named after the World War II fighter plane. Eggert says Iacocca's memory is a little short.
"Lee wanted to call it the Turino. And he was a very firm guy. Nobody could ever understand why. He was the only guy that liked the Turino name. Well, as it turns out, his dad was born in Turin, Italy, and he had promised his father that he would name a car after him. That was his motivation."
Eggert's research team calculated the public response to Iacocca's proposed car name. "It wasn't on the bottom. We made sure of that," Eggert chuckles, remembering Iacocca's ego. "We put in worse ones from the advertising company, but Turino was a real dog. We had to do two studies to convince Lee that the Mustang was the best name. Thankfully, it came out on top in both." (Iacocca later used the name Torino on a mid-size car in the 1970s.) Eggert says the eventual name came from a book his wife had given him: Mustang by Texas author Frank Dolby. "I thought that it would be a good American name. When the car concept came up, I started to promote it."
On the other hand, Eggert's success with the Mustang came after a mistake that was not only the biggest of his career, but one of the biggest in the history of American business. The very word means catastrophe: the Edsel.
Eggert was working in the Ford marketing division when the economist got the nod--or rather push--to research the marketing plan for the Edsel. The company started new dealerships, hired salespeople and invested in one of the largest public relations efforts ever seen.
The car failed, to say the least. By 1958, after fewer than two years of production, the company had lost more than $300 million--more than the combined expenditures of the U.S. State and Justice Departments, including the FBI--and canceled the car named after the founder's son.
Eggert was right in the middle of the disaster. His first car forecast was wrong by a staggering one million vehicles. "What a year to be wrong," he says, shaking his head. "I almost got fired."
THE REMAINDER of his career was considerably calmer, and his predictions more accurate. Eggert left Ford in 1969 to become the chief economist for RCA. While there, he served as an economic consultant to three separate Councils of Economic Advisers to the President, and as an adviser to the Congressional Budget Office. In 1973, Harvard Business School awarded him the highest honor it bestows on an economist, the "Seer of the Year," for his accuracy in economic forecasting. He'd come a long way from the Edsel. He'd become one of the most accurate economic forecasters in the country.
Eggert retired from RCA in 1976 and started Blue Chip Consensus. In his newsletter, he put to work everything he'd learned about the accuracy of averaging. His slogan, in fact, is, "Aiming for accuracy."
Soon, the newsletter's name became synonymous with the best economic predictions in the country. Eggert's frequent appearances on Louis Rukeyser's Wall Street Week and frequent quotes in all the major business publications reinforce this image. Forbes magazine called his newsletter the "industry benchmark."
Since Blue Chip's inception, the consensus has predicted the gross national product remarkably well, to within a 0.9 percent difference. In thirteen years, the consensus has hit the GNP figures on the nose twice, been too high four times and too low on seven occasions. The consensus hit the bull's eye for 1989 with a sluggish 2.5 percent GNP-growth guesstimate.
They've been just as good on inflation; their thirteen-year average on inflation is one percentage-point difference.
Eggert's predictions are now more important than ever, with gas prices soaring, the stock market falling and troops heading out to the Middle East. And indeed, he says that things are not good.
This year, Eggert's publication predicts an anemic 1.8 percent growth rate and a 4.2 percent hike in inflation. The latest poll places the economy on the brink of a recession. In fact, the newsletter has--literally--the caution flag out. The top cover of the newsletter has been yellow. Like flags at Indianapolis, the green, yellow or red colors signal how things are going.
"The Phoenix area will be hit with a sledgehammer. We'll get hit. We'll be hurt," he says. But the news is not all bad. "It won't get worse than the 1974 or 1982 recessions. Historically, Arizona is always hit harder and rises faster."
EGGERT LEANS BACK to stare out the window, the economic guru unnoticed in a town devoted to the New Age, where conversations in coffee shops turn to crystals and pyramid power.
Sedona's sandstone monuments stand in vivid contrast to Eggert's former view of the Manhattan skyline. The fewer than 8,000 inhabitants in Sedona claim no town water or sewer service. The New York Times shows up in the mail if at all.
"New York is a nice place to visit, but . . . " Eggert's voice trails off remembering his years in the concrete jungle. "I had a reporter out here from Forbes magazine recently. You just knew he was jealous. Although when I first came out here, the biggest question I had was, `Where the heck is Sedona?'"
The New York Times calls him the "best known tabulator of prevailing business sentiment" in the country. "The Phoenix area will be hit with a sledgehammer. We'll get hit. We'll be hurt," the economist says.
Eggert was working in the Ford marketing division when the economist got the nod to research the marketing plan for the Edsel.
Iacocca writes the Mustang was named after the World War II fighter plane. Eggert says Iacocca's memory is a little short.
"Accuracy is like a hand grenade. You don't have to be exact. As long as you're reasonably close, it's effective." Thanks to his electronic ears, Eggert has a $700-a-month phone bill--the highest, AT&T says, in the whole town.